Welcome to Mentor Mondays! Today we welcome Jeremy Shure.
Jeremy Shure is Director of Invention for Horizon Media, Inc. in New York City. He has a diverse background in entrepreneurship, venture capital, law, and business. Prior to joining Horizon, Jeremy was a Founder of the Emerging Companies Practice Group at a national law firm. He also blogs for the Huffington Post and had a column for Inc.com. He is an active mentor to a variety of Techstars programs across the United States.
You will most certainly be asked, and asked often, about the competitive landscape surrounding your company.
As this question is raised in meetings with employees, mentors, and potential investors, I propose that you consider this: competition is not a bad word.
Having competition, in and of itself, is never something to be embarrassed about, it’s not something to downplay, and it doesn’t automatically create a knock against you. Rather, having a deep knowledge of your competition and being candid about your place within that market is necessary for your success.
For a company to take an accurate and honest inventory of their own competitive landscape, I suggest addressing the following:
1) It’s Fine To Have Competitors
A somewhat common danger that some founders fall victim to is stating (or believing) that there is “no real competition.” Almost always, that’s not true.
Having some sort of competition, whether direct or indirect, is a good thing. Competition is necessary for invention, and it pushes you to think bigger and be even more creative with your solution.
Critically, having competition demonstrates that there is a captive market in your space. Because of this, it also means that you will not have to educate the market as to why your company is valuable to them, since the market has already signaled validation of your space.
This last piece is important, because creating a market where there is none requires that you convince people to think and act differently than they are used to.
2) Identify Your Competitors
Your competitive landscape is likely much broader than you think.
The ability to successfully compete, and more pointedly, to win, requires a holistic analysis to identify your competition.
The first layer is to address direct competitors, who have a very similar value proposition (product, platform, etc) and are targeting the same customer as you. More challenging, though necessary, is to identify your indirect competitors. These are companies (or trends) which may be in different sectors of the same market, but targeting the same customer or solving the same problem.
Sometimes, it’s the indirect competitors that can significantly impact your ability to penetrate a market, to scale, or even to continue to exist.
For example, many years ago, record stores competed directly with other record stores. However, these stores have become effectively extinct as a result of the indirect competition from digital music. While digital music is not brick and mortar, nor does it market the same medium as record stores (i.e. records, cassette tapes, or CDs), the advent of digital media had a crippling impact on the existence on the industry of record stores.
Lastly, don’t overlook that an attempt to change existing behavior or thinking is also part of your competition. This is often seen as the least obvious area of competition, but one that can’t be overlooked. Many love sticking to their daily routine and their daily behaviors, which includes using certain products or platforms. So, if changing behavior or habits is part of your plan, don’t give short shrift to the challenge associated with that endeavor. To the previous example, the digital music industry has also seen a change in behavior: many no longer feel the need to actually own music – instead, we can get free or paid streaming services for the music that we want to listen to.
3) Understand Your Competitors’ Strengths and Weaknesses
In taking an inventory of your competition, it is necessary to have a deep understanding of your competitors’ strengths and weaknesses, today and in the future. This helps you create effective ways to improve upon your own competitive advantage.
While many focus on capitalizing on the weaknesses of a competitor, it’s equally important to understand their strengths: what’s working, why is it working, and what are you up against? Study your competitors’ customer behaviors and reviews – what do people like, what do they wish they had more of? What is driving customers to that competitor?
Lastly, and this requires brutal honesty: be sure not to get caught up in the excitement around your company where you overstate its strengths and underplay its weaknesses.
This can be dangerous since you want to be as objective as possible when looking at the competitive landscape to get an accurate understanding of what you will encounter when entering the market.
4) Keep Track of the Competition
I propose keeping a chart, which will change over time, of your competitors, as outlined above.
For each, you will want to include their respective strengths and weaknesses. Of course, include your own company on this list, so that you see where it fits within the market.
There is a laundry list of data points to line up your company against the strengths and weakness of your competitors, including but not limited to — target customer, market share, pricing models, customer service, level of technology, revenues, brand recognition, time in existence, and profitability.
Don’t let this list become dormant, rather, make sure to refer to it often and use it as a living document in order to keep you as knowledgeable as possible and give you a leg-up in spotting trends that could impact your company. This will ultimately save you time, save you money, and position you as a founder to best to understand what it takes to achieve market penetration and scale. The more you know, the stronger you are.
Finally, when asked about the competitive landscape, use the opportunity to showcase your expertise of the market, showcase your value within that ecosystem, and ultimately, tell the story of why you will win in the market that you are entering.